quarta-feira, 1 de julho de 2015

The debt relief carrot dangles before Greece’s Alexis Tsipras

Just when you think Alexis Tsipras, Greece’s prime minister, can’t spring any more surprises, he does it again.

After upsetting his creditors by calling a referendum on their latest demands at the weekend and campaigning for their rejection, on Wednesday morning Mr Tsipras sent them a letter. He says that Greece will, after all, accept their conditions subject to some small changes.

This latest twist comes the morning after Greece’s previous loan programme, which the creditor offer was designed to extend, irrevocably expired and Greece defaulted on a payment due to the International Monetary Fund.

What are we to make of this?

I see three possibilities.

First, that the Greek government is simply incompetent, confused and does not know what it’s doing. This is the view many in the eurozone are keen to push. But then they would say that, to make themselves look reasonable in contrast.

Second, that it’s a bluff: Mr Tsipras aims for a rejection to harden support for a no vote in Sunday’s referendum.

The third possibility is the most intriguing. It is that this is a genuine, thought-through position. This would only make sense if Mr Tsipras thinks it can be made to look like a victory. That means he must be holding out for the only prize he has not renounced: a solid promise of debt relief.

It also presupposes that Mr Tsipras has some reason to think it could succeed. Letting the previous loan programme expire is a significant change in this regard. The previous loans were under the ad hoc loan facilities set up in a hurry in May 2010. A fresh loan would have come from the treaty-founded European Stability Mechanism. Athens did in fact apply for financing from the ESM earlier this week.

Shifting to ESM has a couple of advantages. It gives all parties an opportunity, albeit slight, to come out of some of the trenches they have dug. Now that the previous programme has expired, no one need any longer insist on concluding the previous round before discussing a new one.

What is more, the ESM treaty explicitly contemplates the possibility of debt relief which traces back to Angela Merkel’s meeting with Nicolas Sarkozy in Deauville four and a half years ago.

Whether any happens of course depends on a political agreement. But there is substantial support for some kind of debt relief among Greece’s creditors. The IMF has called for it for years and now sees Mr Tsipras largely accepting the other policies it had insisted on.

France has belatedly discovered its power in eurozone matters and has been a formidable force for reason in the past few weeks. Jean-Claude Juncker, president of the European Commission and that self-declared Friend of the Greek People, has dangled the debt relief carrot.

Accepting all the creditors’ conditions in return for an explicit debt relief offer is something Mr Tsipras can take home and ask Greeks to vote Yes to. The question is whether the creditors can accept it too. Some of them already do. The rest, too, should be able to stomach debt relief as long as it does not take the form of cuts in the nominal amounts owed, but refinancing and extending the terms of the existing loans.

This is admittedly the most generous possible interpretation of what Mr Tsipras is trying to do. But it is also what stands the best chance of a decent outcome.

Addressing the German Bundestag on Wednesday, Ms Merkel, the German chancellor, said: “A good European is not a person who accepts an agreement at any price.”